to live at fifty cents a day he can in fifty days buy a sailing sloop which will cost $500, and increase his earnings to $20 a day, while lessening his labor and expenditure. In every step of this process he benefits the labor that needs employment and the people that need transportation. The people of Staten Island get a public ferry established, greatly to their profit, without being at any expense in its establishment. If it proves to be a mistake of judgment, and a losing affair, the loss all falls on Cornelius. This is a saving and gain to society in the first instance, as compared with the cost of imposing a general tax whereby to start the ferry-a project so doubtful that it would perhaps be a more costly labor to get the people to vote for it, than to start it at private risk and run it at private cost. Hence, alike in the period when hoarded capital assumes the responsibility and risk of inaugurating new enterprises, steering industry, and employing labor, the public at large make a great saving in being relieved of all risk and cost in a matter which will inure to their great advantage.

The qualities of character which fit a man to employ labor and direct industry are :

(1) Parsimony.-This disposes him to devote the minimum of his means to personal consumption of himself and household, and the maximum to reproductive purposes. This is what society itself at this stage most needs, since it wants reproductive industry to go on most actively.

(2) A Keen Perception of Values.-This enables him always to so adjust his purchases of raw materials and of labor, and his observations concerning the tendencies of demand or the future wants of his customers, that he will buy and produce for less than he can sell. Only thus can he achieve that expansion in his capital, by which to expand his purchases of materials and labor and the magnitude of his sales. Hence the community are interested that every attempted producer of wealth should have a keen sense of value. Without it his business can not obtain that magnitude which is essential to cheapness.

Finally, financial courage, or the will to let money go when money is to be made by risking it, is required. Without this, one's capital will slowly consume in expensive timidity and unproductive idleness, while one is waiting for those ideal opportunities to arise in which the profits are large, the returns certain, and there is no risk of loss. Such chances never come.

Producing on a large scale promotes production on a cheap

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scale; (a) by the sub-division of labor it makes possible; (b) by the substitution of machinery for manual labor which usually accompanies it; (c) by getting control of a larger demand for consumption; (d) by the substitution of credits for cash in its expenditures; (e) by passing securely through reverses which would wreck industries conducted on small capitals; (f) by paying wages of superintendence to but few persons in proportion to the whole. number employed; (g) by the skill and delicacy of judgment concerning questions of profit which is developed by a long habit of doing only profitable things.*

*Example A.-Effect of large capitals to induce subdivision of labor.-Adam Smith began his great work ("Wealth of Nations," Bk. i. Ch. î.) by pointing out that while one man, working alone, might not be able to make more than one pin a day, certainly not twenty pins, ten men, each making a particular part, one drawing out the wire, another straightening it, a third cutting it, a fourth pointing it (or rather, pointing numbers of pins at once), a fifth grinding it at the top for receiving the head, the other three making the head by as many distinct processes, and so on, the whole ten could make about 48,000 pins a day. Each one would thereby increase his make, by mere sub-division of functions, from one or twenty pins to 4,800 pins.

Many persons can earn their own living by rag-picking, street-sweeping, chimneysweeping, and other peculiar occupations, very simple, and requiring no skill, strength, or endurance, in a community where there is a great division of labor, who, if required to live by farming, hunting, or systematic work at a trade, would die. Some writers appear to so mistake the fact that very helpless and inefficient workers crowd into the great cities and live there as to infer that, because such are only found in the great cities, therefore there is something in the construction or management of society in great cities which makes them helpless and inefficient, whereas the fact is, the subdivision of employments in great cities reduces them down to processes so simple that the simplest minds and weakest bodies are there able to find something which they can do. Hence Henry George says:

"To see human beings in the most abject, the most helpless and hopeless condition, you must go, not to the unfenced prairies, and the log cabins of new clearings in the backwoods, where man, single-handed, is commencing the struggle with nature, and land is yet worth nothing, but to the great cities where the ownership of a little patch of land is a fortune."

Conceding this to be true, it only indicates that thousands of people can get a living of some kind, where there is great subdivision of labor, who would perish if presented with a quarter section of land and obliged to get a living from it.

Example B.-Substitution of machinery for manual labor brought about by large capitals. Mr. Moody* computes that on the Grandin farm in Dakota wheat worth 70 cents per bushel is produced at a total cost in all ways of only 16 cents per bushel, leaving a net profit on the first year of farming of 54 cents per bushel, or over 300 per cent. Mr. Edward Atkinsont says: "If we convert the work done in the direction of machinery upon the great bonanza farms of far Dakota into the yearly work of a given number of men, we find that the equivalent in a fair season, on the best farms, of one man's work for 300 working days in one year, is 5,500 bushels of wheat. Setting aside an ample quantity for seed, this wheat can be moved to Minneapolis, where it is converted into 1,000 barrels of flour, and the flour is moved to the city of New York. By similar processes of conversion of the work of milling and barreling into the labor of one man * "Land and Labor in United States," by Wm. Godwin Moody, p. 52. "The Rate of Wages," p. 75,

88. Society's Gain by Large Accumulations.-Large capitals draw lower rates of interest than small, notwithstanding that equivalent quantities of capital in them often, and except in for a year, we find that the work of milling and putting into barrels 1,000 barrels of flour is the equivalent of one man's work for one year. By a computation based upon the trains moving on the New York Central Railroad, and the number of men engaged in the work, we find that 120 tons, the mean between 4 500 bushels of wheat and 1,000 barrels of flour, can be moved 1,700 to 2,000 miles under the direction of one man, working eighteen months, equal to one and one-half men working one year. When this wheat reaches New York City, and comes into possession of a great baker, who has established the manufacture of bread on a large scale, and who sells the best of bread to the working people of New York at the lowest possible price, we find that 1,000 barrels of flour can be converted into bread and sold over the country by the work of three persons for one year. Let us add to the six and a half men already named the work of another man six months, or half a man one year, to keep the machinery in repair, and our modern miracle is that seven men suffice to give 1,000 persons all the bread they customarily consume in a year. If to these we add three for the work of providing fuel and other materials to the railroad and to the baker, our final result is that ten men working one year serve bread to 1,000."

"Again, iron lies at the foundation of all arts. At an average of 200 lbs. per head in the United States, the largest consumption of iron of any nation, we yet find that the equivalent of one man's work for a year, divided between the coal mine, the iron mine, and the iron furnace, suffices for the supply of 500 persons. One operator in the cotton factory makes cloth for 200, in the woolen factory for 300; one modern cobbler (who is any thing but a cobbler), working in a boot and shoe factory, furnishes 1,000 men, or more than 1,000 women, with all the boots and shoes they require in a year. So it goes on, and the more effective the capital the higher the wages, the lower the cost the more ample the supply."

Of course, if the general cost of producing wheat throughout the world could be brought down to the low figures of production in Dakota, wheat would soon fall everywhere to about twenty cents a bushel, and bread to one cent a loaf.

In printing, seventy-five men can do as much work on a modern printing press as ten thousand men could have done with the hand-presses in use in the beginning of the century. In building, the planing machine does the work of twenty men. In boot and shoe making, one man fifty years ago would make two hundred pairs of boots and shoes in a year-now three hundred pairs. One woman will sew on a machine as much as twelve with the needle.

Example C.-Of the use of large capitals in controlling a larger demand for consump tion. This is conspicuously seen in the operations of competition between rival railways and great manufacturing companies, and underlies their tendencies toward consolidation. Mr. Vanderbilt purchased the Harlem Road when its shares were worth from eleven to nineteen cents only, and when it was almost without business. He then offered to carry all the traffic coming into Albany over the New York Central for one fifth of what had previously been paid to the Hudson River Road for the same service provided the Central would make a like discrimination in favor of the traffic coming to Albany over the Harlem against that coming by the Hudson River. The inducement was too great to be resisted. In a few days Hudson River Railroad stock fell so enormously, and Harlem rose so rapidly, that Vanderbilt was seen to be master of the three roads by owning one. He soon passed into legal control of all the three. By massing his capital, so as to effectively control the largest possible demand for the work of his road, he revolutionized the railway business, and, applying the same tactics to the other roads, compelled their virtual consolidation with the New York Central, thus converting railways from single roads into systems. This made him the richest man living, and did much to improve railway transportation and cheaper freights.

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farming usually, effect a larger production of wealth; and thus the community makes an economy out of large capitals which it could not effect with the same quantity of capital subdivided

The rates at which railway freights were cheapened, largely through the increase of traffic and cheapness of service brought about by this system of concentrated control, are shown by the following table, prepared by the Hon. Joseph Nimmo, Jr.,late Chief of the Bureau of Statistics:

It is shown by this table that since 1868, when the statistics commence, the freight on wheat from Chicago to New York has declined to one-fourth its original value in six

teen years.

Example D.-The subjugation of the Confederate rebellion by the Union arms was financially, perhaps, the most remarkable triumph ever witnessed of the substitution of credit for cash values. At the outset the Federal Government had no money, and not more than $50,000,000 in gold, all told, existed in the country, and hardy any of this was in the hands of the government. Secretary Chase met the bankers of New York, by appointment, to obtain a loan. They offered him $50,000,000 at a high rate, and said that must be. their ultimatum." " Gentlemen," said Mr. Chase, it is for the government of the United States to propose ultimatums. Since you can not lend me the money on which to run the government, I will compel you to run your banks on my money, if I have to issue government notes until it takes a bushel of notes to buy one breakfast." The war was fought through almost wholly without any other than credit money, the only tie connecting it with gold being that it was, for a time, fundable into gold-interest paying bonds, the gold interest on which was secured by collecting the customs duties in gold only. For every other use in the United States, except that of paying customs duties and interest on the public debt, the credit of the government was substituted. This substitution of government credit, in the form of greenback notes and bonds, for the previous attempt to use gold, became in reality, since very little gold had been in fact used, in substitution of public for individual credit, or of government notes for book accounts, which had the effect of bringing business over from a private credit basis to a private cash basis, through the use of government credit, as the equivalent of cash, in all domestic trade.

Goods which had previously been sold on long time, i.e., on the buyer's promise to pay in 60 or 90 days, were now sold for government notes. These became so abundant and so cheap, relatively to gold, that debts which prior to their issue could only be paid with $100 in gold could now be paid in notes, the gold value of which was only $70, 860, or, at least for a few weeks, $45. As every body who had money preferred something else to it, cash payments were promptly made on every side, and promptness in meeting liabilities had almost ceased to be a virtue. The bankruptcy of the government made every body flush. The business failures shrunk in the United States from 6,993 in 1861 to 495 in 1865, from a total liabilities involved in 1861 of of $207,210,001 to a total liabilities involved in 1863 of only $7,899,000. Crimes against person and property fell off in like proportion, jails were empty, and the courts de

among many holders. A newsboy with fifty cents capital will buy fifty papers at one cent and sell them for two cents each in a day. Although he combines a good deal of labor of running and shouting, yet no part of the fifty cents is wages of labor, because no person employs him, and he places his whole capital at risk. If he should happen to lose his papers, or they should be destroyed, or remain unsold until the next day, he would have lost his entire capital. Hence no part of his gain is wages, but all of it is profit; for profit may, as well as wages, be an inducement to labor. The profit on the fifty cents is 100 per cent. a day. When he has made a dollar he can employ a comrade who has no fifty cents to help him, giving him half the profits; and at the end of the next day, if successful, he will have seventy-five cents as the gain of that day, fifty cents on his own work, and twentyfive cents on that of his comrade. His return on his second fifty cents is only 50 per cent. a day. When he has $10 his income would rise to $2.50, if he could get 25 per cent. a day on the whole, and he would be a bright financier if he could do better; for the quantity of leg-work and shouting which he can do in connection with each dollar of the ten is only one-tenth as much as he could do for the first dollar. As capital increases, the amount of labor the owner can give to a given sum of it declines, and therewith his profit declines. When the capital rises to $100, the newsboy or peddler of any kind who can make it earn him $10, or 10 per cent., a day would be a genius. When it becomes $2,000, and the newsboy has graduated into a merchant selling books or groceries, he could not hope, still with the utmost aid of his own labor and that of two assistants, to come out of the year with a gross profit of more than $2,000, so that the rate per cent.

serted. Shortly after the close of the war the former average of failures and crime again returned.

The substitution of credit for money, which the nation as a whole then underwent, has sometimes been imitated on a small scale by private firms and corporations, but the stringency in means, which usually suggests it, is not favorable to success, except in the cases of such notable trading firms as the Hudson's Bay Company, the Alaska Fur Company, the East India Company, whose promises or accepted orders would circulate among large populations in lieu of money.

Example E.-Of the use of large capitals to pass securely through reverses which would wreck the same industries if owned by small capitals.-In the shrinkage of railway stocks in the United States 1882-4, shares which had been worth $6,000,000,000 in 1881 became worth less by $2,000,000,000 in 1884. All this loss occurred without the suspension of traffic on any road cr any interruption to business. Had all the roads been owned by small stockholders the ruin to individuals would have been widespread and the suffering very great, as one will readily sce by assuming a similar shrinkage in the values of farms or other private properties,